If you are considering divorce, it’s vital to plan for the dissolution of the financial partnership in your marriage. This means dividing the financial assets and liabilities you have accumulated during the years of marriage. Further, if children are involved, the future support given to the custodial parent must be planned for.
The time you take to prepare and plan for eventualities will pay off later on. Here is what you can do:
Making an inventory of your financial situation will help you to prepare in two ways:
It will provide you with preliminary information for an eventual division of the property.
It will help you to plan how the debts incurred in the marriage are to be paid off. Although the best way of dealing with joint debt, such as credit card debt, is to get it all paid off before the divorce, often this is not possible. Having a list of your debts will help you to come to some agreement as to how they will be paid off.
First, make a list of all of your assets, joint or separate, including:
- The current balance in all bank accounts
- The value of any brokerage accounts
- The value of investments, including any IRAs
- Your residence(s)
- Your autos
- Your valuable antiques, jewelry, luxury items, collections, and furnishings
Next, make sure you have copies of the past two or three years’ tax returns. These will come in handy later.
Make sure you know the exact amounts of salary and other income earned by both yourself and your spouse.
Find any papers relating to insurance-life, health, auto, and homeowner’s, as well as pension and other retirement benefits.
Next, list all debts you both owe, separately or jointly. Include auto loans, mortgage, credit card debt, and any other liabilities.
Tip: If you are a spouse who has not worked outside the home lately, be sure to open a separate bank account in your own name and apply for a credit card in your own name. This will help you to establish credit after the divorce.